Key facts
- Starter home inventory is down by approximately 300,000 listings compared to 2019.
- The income required to purchase a starter home has increased by over 80% since 2019.
- The median starter home price nationally is $344,000, up from $256,000 in June 2019.
- Sales of homes under $350,000 declined approximately 10% year-over-year in April.
- The first-time homebuyer share of the market increased to 35% in May.
Starter home inventory in the U.S. remains significantly below pre-pandemic levels, with approximately 300,000 fewer listings compared to 2019, according to a new report from Realtor.com. The analysis highlights an affordability gap, where the income required to purchase an entry-level home has surged by more than 80% since 2019, far outpacing wage growth.
While the number of homes priced under $350,000 has increased by 220,000 listings since a 2022 low, the overall supply is still considerably lower than before the COVID-19 pandemic, and prices remain elevated. The typical starter home now costs $344,000, a substantial increase from $256,000 in June 2019. This price growth has been most pronounced at the lower end of the market.
The report estimates that a household income of around $78,000 is now needed to afford a starter home, compared to $43,000 in 2019. This required income has risen much faster than median household income, which has grown by 28.3% over the same period. This affordability challenge, coupled with mortgage rates in the mid-6% range, is a primary constraint for first-time buyers.
Regional data reveals a divergence in market conditions. The South and West have seen price thresholds for entry-level homes fall since 2022, partly due to increased construction in areas like Texas and Florida. Conversely, the Midwest and Northeast are experiencing rising prices. The Northeast, in particular, faces significant challenges with only 29.7% of listings under $350,000 and a starter home threshold nearing $444,000.
Despite some inventory gains, sales of affordable homes have declined, falling about 10% in April compared to the previous year. The first-time homebuyer share of the market has edged up to 35%, though the average age of these buyers has risen to 40. Realtor.com estimates a structural housing shortage of about 4 million homes nationwide, contributing to the ongoing affordability issues.